State employee pay targeted in budget battles

Jan 6, 2011

The start of the new year often brings in a lot of talk of good will. For those in politics, it's talk of bipartisanship.

In Michigan, that spirit is likely to dissolve quickly as the state faces a $1.8 billion budget deficit in the next fiscal year (the state's next fiscal year will start October 1st, 2011).

Peter Luke on MLive.com highlights the discussion beginning to take shape among the leaders in the state legislature.

Republicans pretty much control everything in Lansing now, and the first item they say they plan to cut are salaries and benefits for state employees.

Jase Bolger, the new Speaker in the State House of Representatives, said state employee benefits are definitely on the table if the state is going to close the enormous budget deficit gap:

"There are significant dollars that need to be saved through our compensation models, not just salaries, but the entire compensation."

In his recent piece on the looming budget deficit, Michigan Radio's Lester Graham points out that slashing state employee salaries and benefits only gets them a small percentage of their overall $1.8 billion dollar goal.

Graham spoke with Mitchell Bean, the Director of the House Fiscal Agency. Bean said if you cut state employee pay by 5% and increased their share of health care costs to 20%, it only gets you part way:

"You’ve got about $115 million of savings toward a $1.6 billion problem [now projected to be a $1.8 billion problem].  It's not that it’s not a legitimate question to ask whether you should do that or not, but it certainly doesn’t solve the problem."

So cuts to state employee salaries and benefits are just the tip of the iceberg.

As Graham points out, big cuts are likely coming for Medicaid, prisons, colleges and universities, welfare and food stamps, and State Police. The big $1.8 billion deficit will demand these cuts.

And no one is talking about the political third rail of tax increases.

In fact, Governor Snyder is talking about tax cuts for businesses. Lester Graham says if his plan goes through as Snyder has outlined it now, it would add $1.5 billion more to the budget shortfall.

In the MLive post, the Democratic leader in the State Senate, Senator Gretchen Whitmer of East Lansing, says if the tax cuts go through as proposed, it would mean cutting half the state's spending on things like welfare, universities, and prisons. Whimer said: 

"You can’t move Michigan forward and leave kids behind and make it a more dangerous place to live." 

"Reinventing Michigan" has been Governor Snyder's theme, and that reinvention is likely to come with some big cuts in government spending.